December 17, 2009
When the government steps in to help us poor, pathetic mortals out, things like this happen:
It's no mistake. This credit card's interest rate is 79.9 percent.
The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It's a strategy other subprime card issuers could start adopting to get around the new rules.
Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card's credit line.
In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn't set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.
So, in stepping in to save us all from the big, bad, evil credit card companies, at least one of those companies is jacking interest rates from nearly 10% to nearly 80%? We're talking about a card that lends to sub-prime customers, meaning customers who are much higher risk. As a result, these sub-prime customers default on their loans more often than not, and the company has to do something to be able to keep loaning that credit.
All this can do is open the way for more regulation to keep interest rates low. And, of course, that will drive credit lenders out of business. Then, there will be no credit for anybody and the economy will suffer even further. It's brilliant liberal policy at work, ladies and gentlemen.
Now, I don't have Eddie's gift with the word fuck, much as I wish I did. So I guess I'll have to settle for a simple, "Fuck you."
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